Business | Telecoms
New subscribers send du profit doubling to Dh115m
Du, the second telecom operator to enter the UAE market, on Sunday said that it made Dh115 million in net profits before royalties during the second quarter, over double the figure from the previous quarter.
- By Nadia Saleemm, Staff Reporter
- Published: 22:41 July 26, 2009
- Image Credit:
Dubai: Du, the second telecom operator to enter the UAE market, on Sunday said that it made Dh115 million in net profits before royalties during the second quarter, over double the figure from the previous quarter.
The operator's total active mobile customers jumped to 2.9 million, up from 1.8 million a year ago. The quarter saw an additional 156,000 mobile subscribers despite the econ-omic conditions casting a shadow over the industry.
Revenue generated from mobile customers, its main source, grew by 11 per cent to Dh882 million from the first quarter.
While the beginning of the year saw a slowdown in new subscribers, the months following March saw increasing growth, said Othman Sultan, chief executive of du.
"We started to see some encouraging signs in March ... this is continuing and [we are] seeing significant growth from the first quarter," he said, "We are continuing to be a growth story."
The operator revealed that it saw significant growth in new post-paid customers, at 16,700. "It's clearly the Elite plan that's driving this. The good news is that it's working," he said.
A few months ago, it launched a post-paid-based package that offers special rewards and services.
"It is striking that du's fixed and especially its mobile subscription numbers have continued to grow in the second quarter despite the economic downturn and in contrast to etisalat's performance over the same period," Matthew Reed, senior analyst at Informa Telecoms and Media, said.
In the second quarter, competitor etisalat saw its mobile subscriber base fall by almost 40,000, and its fixed lines dropped by 30,000.
The only subscriber growth it saw was for internet connections, which grew by 77,000 due to its access to almost the whole country. Meanwhile, du's internet services are restricted mainly to free zone areas.
Additionally, du continues to target new entrants into the market with its competitive pricing strategy.
"We always have the lion's share with the new people coming into the UAE, so that's continuing. Whether there will be some churn ... [it] could work both ways," he said, speaking of customer exchanges between the two operators.
"Du's mobile services tend to be priced more competitively - it offers lower connection fees and per-second charging, for example - and the most obvious conclusion is that those features are proving more attractive to the market at present," said Reed.
It kept a close watch on expenses during the past quarter. While total overheads increased slightly, its percentage of costs to revenue fell from 53 per cent to 47 per cent.
"We want to grow, but not at the expense of value created to our shareholders. I wouldn't be happy just adding [hundreds of thousands] of subscribers if these subscribers are not generating money," said Sultan.
More from Telecoms
More from Business
Business Editor's choice
-
Two Europe banks to inject new cash
Bank of England to pump £50b into UK as ecb mulls second credit offer
-
Nokia cuts 4,000 jobs in 3 countries
Company is struggling to make inroads in the smartphone market
